If it’s broke, fix it

Following last week’s release of the American Society of Civil Engineers’ (ASCE) Failure to Act report, we were once again reminded of what the US stands to lose if it keeps putting off investing in its infrastructure. According to the trade group, the US will need to invest $1.4 trillion in infrastructure by 2025 or risk losing $4 trillion in GDP. 

The ASCE analysed five infrastructure sub-sectors and found transportation to be faring the worst, with the annual investment gap expected to widen from $91 billion to $110 billion until 2025. Electricity, water/wastewater, airports and inland waterways have, meanwhile, shown modest improvement, and the investment gap for each of them is expected to narrow during the same time period. 

One of the main reasons for this is increased funding unlocked by recent federal legislation. 

If new legislation is the key to progress, though, why has it not helped surface transportation so far? Congress managed to pass the Fixing America's Surface Transportation (FAST) Act into law in early December. While this was a major success – the country now has five-year legislation after a decade of more than 30 short-term funding patches – it came just hours before the 4 December expiry of funding authorisation.

It’s difficult not to wonder whether the reauthorisation of the US Export-Import Bank, which proved so contentious that Congress allowed its charter to run out for the first time in the credit agency’s 82-year history, hindered passage of the FAST Act.

This raises an important question: wouldn’t it make more sense to have each issue – a multi-year surface transportation bill and the renewal of an agency that is critical to US exports – debated and voted on its own merits?
The answer is yes and no. We spoke with several legal experts who have spent time on Capitol Hill and they seemed to think the inclusion of the Ex-Im Bank rider in the Fast Act neither helped nor hindered passage of the bill. 

Still, there are legislators who believe debating and voting one issue at a time is a change worth pursuing. Arizona Congressman David Schweikert, for example, introduced a bill in July to prohibit the consideration of any bill or joint resolution carrying more than one subject. Unfortunately, that proposal hasn’t gotten very far.

The experts we spoke with generally agreed that the real hurdle is not the legislative process, but rather finding the answer to the question: “How do you pay for it?” But that’s a question we’ve been hearing for years now and not being able to answer it can no longer serve as an excuse to keep putting off necessary action. Assuming the ASCE is correct in its projections about what the US economy will lose in the next decade by not investing in infrastructure, then public funding will become even scarcer.

Asked why the private sector couldn’t be called upon to provide the necessary capital in the form of P3s, one source pointed to government nervousness with the private sector, not to mention fear of dealing with labour union and cost-share issues. However, those issues can be dealt with contractually.

It’s true that Americans are accustomed to the government providing essential services and owning public infrastructure and for a long time it has done just that. But with infrastructure investment accounting for 2.4 percent of GDP, half of what it was 50 years ago, according to the Council on Foreign Relations, it is clear that government alone is unable to make the necessary investment. 

And it’s not just the lack of funding. “Congress is like that second-semester senior in high school that doesn’t do anything until the night before it’s due,” one source said. Looking at Congress’ track record that is an apt comparison. The problem, however, is this isn’t high school.